Why are you hiring Temps when you need Perm?

Stop hiring temps.

You’re better off hiring perm.

Every so often, we have a job that needs doing, and we don’t have the staff to spare. The job is only going to be a couple weeks, maybe a month, but then it’s done. This is the ideal situation for a temp worker; a person who just needs a side job during a  layoff or to make a little extra cash.

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The person coming in knows full well what the deal is. They’re there for a short time to earn the cash, then probably move on to the next job or into a full time role somewhere else.

The temp model has a reason for existing, and that is not to fill the workforce with people in precarious employment. It doesn’t  benefit your business or the candidates working there. In fact, that model exists only to serve one party.

There is a better way to attract and hire the first rate talent to your business. When you hire perm, you will find better people and keep them longer.

Second Rate Positions Don’t Attract First Rate Candidates

Living on the Edge

Most people are looking for stability and security. Regardless if they are working on the factory line or if they are a project manager, everyone is driven by the same basic needs. We all want enough money at the end of the month to pay for the roofs over our heads and the food on the table. Hopefully with enough left over to put away for retirement or the kids’ college fund.

Imagine you are looking for a job. We have all been there, flipping through the help-wanted ads or scrolling through the job-site pages. We all want a job that matches our skillsets and wage expectations. We worked hard to get the experiences we have, even if it was through some curious decision making.

The job hunt painstaking and grueling task

Serious candidates must research the company, tailor the resume to match the keywords, and write a specific cover letter that stands out from the crowd. One job application can easily take an hour.newspaper classifieds

When there is such a high time cost to submitting a job application, your top-talent candidates are not going to spend that time on temp jobs with no security. They will, in fact, gloss right over it.

Now, I can hear you thinking, I just have people building widgets on the line, I don’t need doctoral candidates.

Talent Matters at all Levels

Well, let me ask you, how much money are you losing because your people on the line don’t have the job security? Let’s look at your absentee rates. How many days are temps missing? What kind of costs are you incurring because you are constantly training and retraining temps?

I have seen this first hand. An employer will use temporary workers to fill out the workforce because the wages are lower. But the math just doesn’t work out. The lost hours and lowered productivity almost always eclipse the savings in wages.

Now, if you were to offer the same people a fulltime and permanent position, they will be more likely to apply. Remember that security? Well, this is how people get it.

Keep them Longer

The Math of Temp Turnover

Care to take a guess at what the US number for the temporary and contract  job turnover rate is? According to the American Staffing Association, that rate is 352%.

No, I did not miss a decimal in there.

street walking personPerhaps a more meaningful number, although less shocking, is the 65% turnover rate for temp retail workers. There is no best case scenario in either number. The reality is your temp employees are really just that, temporary. If you are using them as a long-term solution for your staffing needs, it’s just a revolving door of training and retraining. As long as they know they have a better than good chance of not being hired, they will be looking for work elsewhere. Broken promises of being hired are pretty standard among the temporary workforce.

According to this Robert Half Study, for every bad hire, you will lose, on average, 52 hours.

Each time you pull a new person into your business, you are taking another person away from his or her job to do the training. With the temp  model, you will never be able to reach anything close to peak efficiency. Without that cohesion and teamwork that comes from working together for a long time, you might as well be burning your dollar bills.

While it’s difficult to compare that number with the Canadian Turnover Rates, the chart below gives us a pretty good indication of the difference. Ontario manages the second lowest turnover rate at around 7%. We can reasonably ascertain that these lower turnover rates are due to permanent employees.
Voluntary Turnover Rate by Region

Where the money goes

In the staffing model, there are three parties. There is the employer; the company who needs talent to help make the business a success. There are the candidates; the people who are eager to work and make a difference in some meaningful way. And there is the staffing agency; the people bringing talent to the business.

With the temporary worker model, though, only one of those parties benefits.

It’s not the employer. With the temp employee turnover rates as high they are and the constant costs of training, the business is at a constant state of low efficiency.

The people who are employed are not benefiting, either. They lack stability and security. There is the constant anxiety of wondering if they will have a job tomorrow. No one can maintain a motivation and loyalty when a company may turf them at any moment.

The only people who are profiting in the arrangement are the staffing agencies, charging by the hour for every temp person through your doors.

Temporary is not Another Word for Probation

Take ‘em for a Test Drive

One of the biggest reasons I have heard for hiring temps is it is a good method to vet people before committing to hiring them full time. It’s easier to watch and to learn what kind of people they are while they are working and there isn’t the risk of making a bad hire, right?

Wrong.

It takes less than a month to realize you’ve made a bad hire. It’s that quick, so why do you need to worry about putting people through months of training before letting that person go. It’s one of those silly things we seem to tell ourselves to justify a bad decision. Just rip the band-aid off and be done with it.

While this may seem coarse, it’s probably the healthiest thing for all parties. The business doesn’t need to invest more time into a person who isn’t a good fit for the organization. And that person who isn’t the good fit doesn’t need to go through the stress of trying to work out how to stay there. They will feel relieved at being given the chance to move on into a role that is a better fit.

It’s so much more difficult to fire someone once they have been hired, right?

No. Actually.

There is this myth that it’s really difficult to fire someone or that it’s really expensive once they are hired. For better or worse, it really isn’t.

for hire signFirst, the ESA explains that there is no need for notice of termination if an employee has been there less than three months. That’s not specifically a probation period, it’s just the way is law is written. If your new person isn’t doing what was expected and there isn’t opportunity to coach them, then you can just move on.

This de facto probation period isn’t your only tool to prevent a misguided hire. By explicitly writing in a probationary period into the letter of offer or contract, you can extend the time to fire a person to the length that is appropriate for your business.

With this kind easy protection, doesn’t it seem more sensible to simply hire perm straight away?

Final Thoughts

Let’s face it, a lot of temporary agencies have a bad reputation and deservedly so. It doesn’t have to be this way and your business doesn’t have to lose money.

Get the good people by offering them a position they know they can make their own. This will give them the stability and security to ensure they stick around longer, bringing down your turnover costs and raising your efficiency.

We can do away with this idea that we need to dangle the spectre of a full-time hire to ensure we get the best people for the job. That’s just backwards thinking and the data has given us the proof.

Have I convinced you yet? What are your thoughts?

Paul Bergsma
paul@bnlgroup.ca
#HonestReliableFun
www.bnlgroup.ca